dcsimg

Emerging field: Food trucks

Emerging field: Food trucks

There's a reason ABC News called food trucks the "hottest new business venture."

According to IBISWorld, one of the leaders of business intelligence and industry research, the street vendor industry (which includes food trucks) in America has reached a revenue of one billion dollars, with approximately 30,810 businesses and 35,502 employees. It truly took the food industry by storm, with hundreds of new food trucks opening each year.

But before you race to join the food truck industry, there are some things you should consider.

Is the food truck industry for you?

To determine if you should go into the food truck industry, consider these three facts:

  1. A lot of food trucks go out of business: Though it's tough to put an exact number on it, one estimate in a Huffington Post article showed that of the 100 food trucks that opened in 2012 in Los Angeles, 35 of them have closed. That's just in one year! And though perhaps California doesn't represent the situation everywhere, no one doubts that the situation is similar elsewhere. Can you deal with that risk?

  2. Food trucks thrive in big cities: As IBISWorld pointed out in its food truck research, the food truck industry is "located in areas which have a large population" and is "more concentrated in the most populated cities, and particularly, in the central parts of these metropolitan areas." According to Zagat, the American cities with the "hottest food-truck scenes" are: New York City, Chicago, Miami, Austin, Portland, Los Angeles, Cleveland, Boston, Houston and Washington, D.C. -- all large cities. If necessary, would you be willing to live in a large city where food trucks thrive?

  3. Food trucks are still businesses: With its flexible location and hours, it may be tempting to lose sight of the fact that food trucks, in many ways, still run like any other business. Have you earned a bachelor's degree in business or studied independently on how to build a successful business? Since opening a food truck is entrepreneurial, a business-related degree may not be required per se, but anyone starting a business may benefit from it.

If you can accept the risk, you're open to the possibility of relocating if necessary, and you prepare yourself for the business side of food trucks, then you may be ready to enter the food truck industry.

How to break into the field

You can't just buy a vehicle and call it a food truck. There are a lot more hoops than that to jump through. According to Mobile Cuisine Magazine, there are several steps to undergo as you're breaking into the food truck field, including:

  • Decide on a menu, which requires demographic research and perfecting recipes
  • Choose a location, which requires finding legal spots to park and areas that are popular
  • Decide if you're going to rent a food truck ($2,000-$10,000 a month, according to the article), buy a used food truck ($10,000-$75,000), buy a new food truck ($75,000-$125,000) or buy a custom food truck ($125,000-$300,000)

And then, according to the article, there are a lot of legal considerations, such as finding a legal spot to park the truck when you're not using it, taxes, permits, licenses, insurance and more. A business degree or a knowledge of how businesses run could be greatly beneficial when tackling all of these factors. Some culinary degree programs also offer instruction on running a food business.

The future of food trucks

No one can be certain, but there seems to be a general consensus on the food truck industry's future.

According to an Emergent Research report published by financial company Intuit, food trucks are expected to generate between 3 and 4 percent of the total restaurant revenue (about $2.7 billion) by 2017, which is a fourfold increase from 2012. Over time, according to the report, food trucks will expand to smaller cities and suburban areas, gaining share in catering and special events such as weddings.

The food truck industry as a whole has a bright future. Deciding to be a part of it, as you can see, takes a lot of work. You'll need money up front, a passion for and knowledge of food, some degree of business acumen, a desirable menu and location, and a good understanding of the law. Only you can make that call.

Sources:

"Hottest New Business Venture," ABC News, March 20, 2013, Reena Ninan and Mary Marsh, http://abcnews.go.com/Business/hottest-business-venture-food-trucks/story?id=18774278

"Breaking Into the Food Truck Industry," Mobile Cuisine, http://mobile-cuisine.com/business/breaking-into-the-food-truck-industry-%E2%80%93-part-1/

"Which U.S. City has the Hottest Food-Truck Scene?" Zagat, February 22, 2013, Lauren Bloomberg, http://blog.zagat.com/2012/02/which-us-city-has-hottest-food-truck.html

"Food Truck Failures Reveal Dark Side, But Hope Shines Through," Huffington Post, January 18, 2013, Rachel Tepper, http://www.huffingtonpost.com/2013/01/22/food-truck-failures_n_2499463.html

IBISWorld, Street Vendors in the U.S.: Market Research Report, http://www.ibisworld.com/industry/default.aspx?indid=1683

"Food Trucks Motor Into the Mainstream," Intuit, http://network.intuit.com/wp-content/uploads/2012/12/Intuit-Food-Trucks-Report.pdf